The headline numbers might look like a retreat: Over the summer, the FCA took formal regulatory action against just two firms alongside eight individuals. But rather than signaling a softer approach to market misconduct, the figures point to a quiet revolution in how the City is regulated.
According to Simon Morris, Financial Services Regulatory Partner at CMS, the watchdog has shifted its core battlefield away from costly post-collapse enforcement actions and toward early supervisory intervention.
Photo: CMS
”The FCA supervisory stance of acting to head off problems before they occur through its exercise of supervisory powers such as voluntary variations of permission, own-initiative imposition of requirements, and so on, is now taking precedence over the occasions when it needs to take disciplinary action,” Morris says. “Supervisory action, of course, heads off the problem. Disciplinary action is punishing the firm after the problem.”
The tangible dividend of this approach is already showing up in the industry’s bottom line. “One of the FCA’s real achievements has been increasing standards so that the actual annual levy of the Financial Services Compensation Scheme, which was heading a few years ago towards a billion pounds a year, has now fallen by two-fifths, if not half, of that figure,” Morris notes. “The FCA views that as a real achievement achieved by its increased supervisory stance.”
The reality behind the bans: ‘Piggybacking’ and regulatory lag
A closer look at the eight individual FCA enforcement actions reveals that many do not represent protracted investigations into novel regulatory territory. Instead, the regulator is methodically exercising its FSMA section 56 powers to clean up the market by acting on court judgments and criminal convictions.
”It’s not at all unusual for the FCA almost to piggyback on the court conviction and, almost for the sake of good order, to prohibit the individuals,” Morris explains. “Prohibition is actually putting out quite a powerful message to the market as to what is unacceptable conduct.”
Recent actions illustrate this standard regulatory housekeeping in practice:
Howard Duckett (Beauforce Corporation Limited): Prohibited after a 10-year High Court director disqualification. As an approved SMF3 and compliance officer, Duckett failed a basic threshold: “The court found he repeatedly lied on oath, that he fabricated evidence… and he didn’t disclose to the FCA he’d been disqualified,” says Morris. However, the case also demonstrates the sluggish pace of administrative follow-ups: “In 2020, six years ago, Duckett was disqualified by the courts. This happens to be six years later that the FCA is prohibiting him.”
“A board of directors nods off if you’re telling them about companies being fined; they sit up and pay attention if you’re talking about them being themselves fined or disqualified.”
Simon Morris, Financial Services Regulatory Partner at CMS
Demetrios Hadjigeorgiou (SVS Securities): Fined £56,400 and banned from senior management roles for failing to challenge conflicts and an undisclosed 10% markdown on customer bond redemptions. Morris highlights a crucial regulatory shift: “There’s a footnote that says he was originally pursued for breaches of Statement of Principle 1, that is integrity, and they have changed this on the same facts to a breach of Statement of Principle 6 – due skill, care, and diligence.”
Paul Taylor and Esmeralda Toni (Blue Horizon Asset Management): Fined £489,000 ($664,000) and £121,200 ($165,000) respectively and banned after falsifying documents to fabricate a €200m ($233m) bond portfolio during attempts to purchase a UK bank and soccer club Reading FC.
Conviction-led prohibitions: Disqualifying individuals such as Daniel Pugh, Dharmendra Devji Solanki, and father-and-son directors Alec Finch and Robert Finch, former executives at AFL Insurance Brokers Limited, following outside fraud and civil dishonesty findings.
The integrity line: No room for self-assessment
Photo: Macfarlanes
The Duckett decision also highlights the uncompromising standard the FCA applies to disclosure. While the underlying dishonesty was egregious, contentious regulatory specialists emphasize that the threshold for regulatory action is much broader.
”This is an egregious example of failure to disclose, as the FCA found that the conduct was dishonest and that the individual had falsified documents to conceal the true position,” says Laura Bridgewater, Disputes Partner at Macfarlanes. “Nevertheless, the FCA has taken a strict approach to non-disclosure for some time.”
Bridgewater notes that senior managers cannot filter what they share: “The regulator expects to be told about anything that could be relevant, and the message is clear – individuals shouldn’t try to make their own assessment of these things; that’s for the FCA to do. Whatever could be relevant, they must disclose. We also saw this with the Fuenmayor decision, where even though the individual felt his overseas regulatory record was politically motivated and not relevant, that was something the FCA wanted to be able to consider for itself.”
Personal promises over corporate shields
For boardroom executives wondering whether the corporate veil or a firm’s collapse offers protection, regulatory specialists are clear: individual liability under the Senior Managers and Certification Regime (SMCR) remains direct and durable.
”If you are individually approved by the FCA, you’ve made personal promises direct to the FCA: number one, I shall have integrity; number two, I shall be competent… and if you breach them, the FCA can go against you,” Morris explains. “That is not double jeopardy. It is all about raising standards in the industry. A board of directors nods off if you’re telling them about companies being fined; they sit up and pay attention if you’re talking about them being themselves fined or disqualified.”
That individual scrutiny is set to dominate upcoming enforcement cycles.
“The regulator expects to be told about anything that could be relevant, and the message is clear – individuals shouldn’t try to make their own assessment of these things; that’s for the FCA to do.”
Laura Bridgewater, Disputes Partner at Macfarlanes
”For the past few years, the FCA has shown an increased focus on senior leadership accountability, so it is not surprising to see this borne out now as more of these cases reach their conclusion,” says Bridgewater. She points to the FCA’s 2025/26 enforcement figures, which revealed 127 open operations covering 218 individuals compared to 108 firms. “That may well indicate that the FCA is looking at individuals who might be accountable in most enforcement cases, so corporates will be aware that their senior leadership is going to be under scrutiny if something goes wrong.”
The defense dilemma: ‘Fewer, faster, and more targeted’
This dual track, front-loaded supervision alongside aggressive individual targeting, aligns with the broader enforcement strategy spearheaded by joint directors Therese Chambers and Steve Smart.
While the regulator aims to resolve inquiries more swiftly, the pressure shifts directly to defense teams. “From our perspective, the efforts of the current Enforcement leadership to pursue fewer, faster, and more targeted investigations are welcome,” Bridgewater concludes. “As long as there is a fair opportunity for the subject of the investigation to put forward its position, and for that to be properly considered by the FCA before determining an outcome.”